When it comes to creating informational products many people decide that they need volume sales to create the flood of riches that they desire and dream about.
When it comes to pricing strategies there are usually two business objectives. These are to either maximize short-term profits or to gain market share.
This almost creates a myopic view of your long-term goals and many people focus on quantity of sales rather than the quality of the customer. It is all too easy in a difficult climate to reduce the costs of our products to entice more sales.
This is bad thing to do in my opinion, as this kind of knee-jerk reaction to the current economic climate can not only hurt your long-term sales but also your long-term reputation.
For example, if your average product is $47 and you drop the prices to $27 (I have seen a lot of marketers do this recently) then it is hard to believe that the product is actually worth $47 in the first place, especially if they raise the price again.
Now, dropping your price may well get you more customers in the short term but in the long term you may be loosing out on the premium customers who in the long run can make you more money in upsells and future promotions.
Let me explain with an example. Joe Smith buys your product priced at $27 and later on you promote a product that costs $297 and he is not really willing to shell out the extra cash on that as the price point difference is not worth his investment as far as he perceives because you sold yourself short.
Now, taking the same example, if your perceived value was over $97 and you sold the same product (and over delivered with real value) for $97. Jane Brown purchased it at this price, you are much more likely to upsell her to $297 and then up the sales funnel to $597 or greater because of the difference between the price points.
Using this example, you may have lost a number of lower $27 purchasers like Joe but the quality of the customer you have secured who has the money to spend on your $97 is much more likely to be a long-term investment for your business and will more than help you grow your sales funnel in the future.
The bottom line is don’t sell yourself short. It’s all to easy to panic and try and scramble for each and every dollar out there but the plain simple truth is the money is out there and while the Joe’s of this world may be scrimping and saving their $27, the Jane’s still have money and want to spend it and spend it with you. You just have to target them and the best way is to increase your perceived value realistically and increase your prices.
Experiment with this, and see what happens, the results may just surprise you.